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STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated August 26, 1995 (the "Agreement"), by
and between FOURTH FINANCIAL CORPORATION, a Kansas corporation ("Issuer"),
and BOATMEN'S BANCSHARES, INC., a Missouri corporation ("Grantee").
RECITALS
(A) Merger Agreement. Grantee and Issuer have, on a date prior to
the date hereof, entered into an Agreement and Plan of Merger, dated August
25, 1995 (the "Merger Agreement"), providing for, among other things, the
merger of Issuer with and into a wholly owned subsidiary of Grantee, with
such subsidiary being the surviving corporation.
(B) Condition to Merger Agreement. As a condition and inducement
to Grantee's pursuit of the transactions contemplated by the Merger
Agreement, and in consideration therefor, Issuer has agreed to grant
Grantee the Option (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and
in the Merger Agreement, and intending to be legally bound hereby, Issuer
and Grantee agree as follows:
1. Defined Terms. Capitalized terms which are used but not
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.
2. Grant of Option. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase a number of shares of common stock, par value $5.00
per share ("Issuer Common"), of Issuer up to 5,500,000 of such shares (as
adjusted as set forth herein, the "Option Shares", which shall include the
Option Shares before and after any transfer of such Option Shares, but in
no event shall the number of Option Shares for which this Option is
exercisable exceed 19.9% of the issued and outstanding shares of Issuer
Common) at a purchase price per Option Share (as adjusted as set forth
herein, the "Purchase Price") equal to $33.50.
3. Exercise of Option.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of the agreements
or covenants contained in this Agreement or the Merger Agreement, and
(ii) no preliminary or permanent injunction or other order against the
delivery of shares covered by the Option issued by any court of competent
jurisdiction in the United States shall be in effect, the Holder may
exercise the Option, in whole or in part, at any time and from time to time
following the occurrence of a Purchase Event (as hereinafter defined);
provided that the Option shall terminate and be of no further force or
effect upon the earliest to occur of (A) the Effective Time, (B)
termination of the Merger Agreement in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
(as hereinafter defined) other than a termination thereof by Grantee
pursuant to Section 7.02 of the Merger Agreement (but only if the breach of
Issuer giving rise to such termination was willful) (a termination of the
Merger Agreement by Grantee pursuant to Section 7.02 thereof as a result of
a willful breach by Issuer being referred to herein as a "Default
Termination"), (C) fifteen (15) months after a Default Termination, or
(D) fifteen (15) months after termination of the Merger Agreement (other
than by reason of a Default Termination) following the occurrence of a
Purchase Event or a Preliminary Purchase Event; provided, however, that any
purchase of shares upon
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exercise of the Option shall be subject to compliance with applicable law.
The term "Holder" shall mean the holder or holders of the Option from time
to time, and which initially is Grantee. The rights set forth in Section 8
hereof shall terminate when the right to exercise the Option terminates
(other than as a result of a complete exercise of the Option) as set forth
herein.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) Without Grantee's prior written consent, Issuer
shall have recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any person (other than Grantee or any subsidiary of
Grantee) to effect (A) a merger, consolidation or similar transaction
involving Issuer or any of its significant subsidiaries (other than
transactions solely between Issuer's subsidiaries that are not
violative of the Merger Agreement), (B) the disposition, by sale,
lease, exchange or otherwise, of assets or deposits of Issuer or any
of its significant subsidiaries representing in either case 25% or
more of the consolidated assets or deposits of Issuer and its
subsidiaries, or (C) the issuance, sale or other disposition by
Issuer of (including by way of merger, consolidation, share exchange
or any similar transaction) securities representing 25% or more of
the voting power of Issuer or any of its significant subsidiaries,
other than, in each case of (A), (B), or (C), any merger,
consolidation or similar transaction involving Issuer or any of its
significant subsidiaries in which the voting securities of Issuer
outstanding immediately prior thereto continue to represent (by
either remaining outstanding or being converted into the voting
securities of the surviving entity of any such transaction) at least
65% of the combined voting power of the voting securities of the
Issuer or the surviving entity outstanding immediately after the
consummation of such merger, consolidation, or similar transaction
(provided any such transaction is not violative of the Merger
Agreement)(each of (A), (B), or (C), an "Acquisition Transaction");
or
(ii) any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of or the
right to acquire beneficial ownership of, or any "group" (as such
term is defined in Section 13(d)(3) of the Exchange Act), other than
a group of which Grantee or any subsidiary of Grantee is a member,
shall have been formed which beneficially owns, or has the right to
acquire beneficial ownership of, 25% or more of the voting power of
Issuer or any of its significant subsidiaries.
(c) As used herein, a "Preliminary Purchase Event" means any
of the following events:
(i) any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement
under the Securities Act, with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common such that, upon
consummation of such offer, such person would own or control 15% or
more of the then outstanding shares of Issuer Common (such an offer
being referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the shareholders shall not have approved the Merger
Agreement by the requisite vote at the Fourth Shareholders' Meeting,
the Fourth Shareholders' Meeting shall not have been held or shall
have been canceled prior to termination of the Merger Agreement, or
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Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Merger Agreement, in each case after
it shall have been publicly announced that any person (other than
Grantee or any subsidiary of Grantee) shall have (A) made, or
disclosed an intention to make, a bona fide proposal to engage in an
Acquisition Transaction, (B) commenced a Tender Offer or filed a
registration statement under the Securities Act with respect to an
Exchange Offer, or (C) filed an application (or given a notice),
whether in draft or final form, under the Home Owners' Loan Act,
as amended, the B.H.C.A., the Bank Merger Act, as amended, or the
Change in Bank Control Act of 1978, as amended, for approval to engage
in an Acquisition Transaction; or
(iii) any person (other than Grantee or any subsidiary of
Grantee) shall have made a bona fide proposal to Issuer or its
shareholders by public announcement, or written communication that is
or becomes the subject of public disclosure, to engage in an
Acquisition Transaction; or
(iv) after a proposal is made by a third party to Issuer
or its shareholders to engage in an Acquisition Transaction, or such
third party states its intention to the Issuer to make such a
proposal if the Merger Agreement terminates, Issuer shall have
breached any representation, warranty, covenant or agreement
contained in the Merger Agreement and such breach would entitle
Grantee to terminate the Merger Agreement under Article Seven thereof
(without regard to the cure period provided for therein unless such
cure is promptly effected without jeopardizing consummation of the
Merger pursuant to the terms of the Merger Agreement); or
(v) any person (other than Grantee or any subsidiary of
Grantee), other than in connection with a transaction to which
Grantee has given its prior written consent, shall have filed an
application or notice with any Regulatory Agency for approval to
engage in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified
in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Preliminary Purchase Event or Purchase Event, it being
understood that the giving of such notice by Issuer shall not be a
condition to the right of Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it
shall send to Issuer a written notice (the date of which being herein
referred to as the "Notice Date") specifying (i) the total number of Option
Shares it intends to purchase pursuant to such exercise and (ii) a place
and date not earlier than three (3) business days nor later than fifteen
(15) business days from the Notice Date for the closing (the "Closing") of
such purchase (the "Closing Date"); provided that the first notice of
exercise shall be sent to Issuer within one hundred eighty (180) days after
the first Purchase Event of which Grantee has been notified. If prior
notification to or approval of any Regulatory Agency is required in
connection with such purchase, Issuer shall cooperate with the Holder in
the filing of the required notice or application for approval and the
obtaining of such approval and the Closing shall occur immediately
following such regulatory approvals (and any mandatory waiting periods).
Any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto.
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4. Payment and Delivery of Certificates.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated
by Issuer, an amount equal to the Purchase Price multiplied by the number
of Option Shares to be purchased on such Closing Date, and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer
specified in Section 12(f).
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such
Closing, which Option Shares shall be free and clear of all liens and
subject to no preemptive rights, and (B), if the Option is exercised in
part only, an executed new agreement with the same terms as this Agreement
evidencing the right to purchase the balance of the shares of Issuer Common
purchasable hereunder, and (ii) Holder shall deliver to Issuer a letter
agreeing that Holder shall not offer to sell or otherwise dispose of such
Option Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each
Closing shall be endorsed with a restrictive legend which shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION
AGREEMENT DATED AS OF AUGUST 26, 1995. A COPY OF SUCH
AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE
UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the portion of the above legend relating
to the Securities Act shall be removed by delivery of substitute
certificate(s) without such legend if Holder shall have delivered to Issuer
a copy of a letter from the staff of the S.E.C., or an opinion of counsel
in form and substance reasonably satisfactory to Issuer and its counsel, to
the effect that such legend is not required for purposes of the Securities
Act.
(d) Upon the giving by Holder to Issuer of the written notice
of exercise of the Option provided for under Section 3(e), the tender of
the applicable purchase price in immediately available funds and the tender
of this Agreement to Issuer, Holder shall be deemed to be the holder of
record of the shares of Issuer Common issuable upon such exercise,
notwithstanding that the stock transfer books of issuer shall then be
closed or that certificates representing such shares of Issuer Common shall
not then be actually delivered to Holder. Issuer shall pay all expenses,
and any and all United States federal, state, and local taxes and other
charges that may be payable in connection with the preparation, issuance
and delivery of stock certificates under this Section in the name of Holder
or its assignee, transferee, or designee.
(e) Issuer agrees (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued or treasury
shares of Issuer Common so that the Option may be exercised without
additional authorization of Issuer Common after giving effect to all other
options, warrants, convertible securities and other rights to purchase
Issuer Common, (ii) that it will not, by
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charter amendment or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek
to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer,
(iii) promptly to take all action as may from time to time be required
(including (A) complying with all premerger notification, reporting and
waiting period requirements, and (B) in the event prior approval of or
notice to any Regulatory Agency is necessary before the Option may be
exercised, cooperating fully with Holder in preparing such applications or
notices and providing such information to such Regulatory Agency as it may
require) in order to permit Holder to exercise the Option and Issuer duly
and effectively to issue shares of the Issuer Common pursuant hereto, and
(iv) promptly to take all action provided herein to protect the rights of
Holder against dilution.
5. Representations and Warranties of Issuer. Issuer hereby
represents and warrants to Grantee (and Holder, if different than Grantee)
as follows:
(a) Corporate Authority. Issuer has full corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby; the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of Issuer, and
no other corporate proceedings on the part of Issuer are necessary to
authorize this Agreement or to consummate the transactions so contemplated;
this Agreement has been duly and validly executed and delivered by Issuer.
(b) Beneficial Ownership. To the best knowledge of Issuer,
as of the date of this Agreement, no person or group has beneficial
ownership of more than 10% of the issued and outstanding shares of Issuer
Common.
(c) Shares Reserved for Issuance; Capital Stock. Issuer has
taken all necessary corporate action to authorize and reserve and permit it
to issue, and at all times from the date hereof through the termination of
this Agreement in accordance with its terms, will have reserved for
issuance upon the exercise of the Option, that number of shares of Issuer
Common equal to the maximum number of shares of Issuer Common at any time
and from time to time purchasable upon exercise of the Option, and all such
shares, upon issuance pursuant to the Option, will be duly authorized,
validly issued, fully paid and nonassessable, and will be delivered free
and clear of all claims, liens, encumbrances, and security interests (other
than those created by this Agreement) and not subject to any preemptive
rights.
(d) No Violations. The execution, delivery and performance
of this Agreement does not or will not, and the consummation by Issuer of
any of the transactions contemplated hereby will not, constitute or result
in (A) a breach or violation of, or a default under, its certificate of
incorporation or by-laws, or the comparable governing instruments of any of
its subsidiaries, or (B) a breach or violation of, or a default under, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation of it or any of its subsidiaries (with or without the giving of
notice, the lapse of time or both) or under any law, rule, ordinance or
regulation or judgment, decree, order, award or governmental or non-
governmental permit or license to which it or any of its subsidiaries is
subject, that would, in any case give any other person the ability to
prevent or enjoin Issuer's performance under this Agreement in any material
respect.
6. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Issuer that Grantee has full corporate power and
authority to enter into this Agreement and, subject to obtaining the
approvals referred to in this Agreement, to consummate the transactions
contemplated
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by this Agreement; the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Grantee; and
this Agreement has been duly executed and delivered by Grantee.
7. Adjustment upon Changes in Issuer Capitalization, etc.
(a) In the event of any change in Issuer Common by reason of
a stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction so that Holder shall receive, upon
exercise of the Option, the number and class of shares or other securities
or property that Holder would have received in respect of Issuer Common if
the Option had been exercised immediately prior to such event, or the
record date therefor, as applicable. If any additional shares of Issuer
Common are issued after the date of this Agreement (other than pursuant to
an event described in the first sentence of this Section 7(a), upon
exercise of any option to purchase Issuer Common outstanding on the date
hereof or upon conversion into Issuer Common of any convertible security of
Issuer outstanding on the date hereof), the number of shares of Issuer
Common subject to the Option shall be adjusted so that, after such
issuance, it, together with any shares of Issuer Common previously issued
pursuant hereto, equals 19.9% of the number of shares of Issuer Common then
issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option. No provision of this Section 7 shall be
deemed to affect or change, or constitute authorization for any violation
of, any of the covenants or representations in the Merger Agreement.
(b) In the event that Issuer shall enter into an agreement
(i) to consolidate with or merge into any person, other than Grantee or one
of its subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) to permit any person,
other than Grantee or one of its subsidiaries, to merge into Issuer and
Issuer shall be the continuing or surviving corporation, but, in connection
with such merger, the then outstanding shares of Issuer Common shall be
changed into or exchanged for stock or other securities of Issuer or any
other person or cash or any other property or the outstanding shares of
Issuer Common immediately prior to such merger shall after such merger
represent less than 50% of the outstanding shares and share equivalents of
the merged company, or (iii) to sell or otherwise transfer all or
substantially all of its assets or deposits to any person, other than
Grantee or one of its subsidiaries, then, and in each such case, the
agreement governing such transaction shall make proper provisions so that
the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged
for, an option (the "Substitute Option"), at the election of Holder, of
either (x) the Acquiring Corporation (as hereinafter defined), (y) any
person that controls the Acquiring Corporation, or (z) in the case of a
merger described in clause (ii), Issuer (such person being referred to as
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided, that, if the terms of the Substitute Option cannot, for
legal reasons, be the same as the Option, such terms shall be as similar as
possible and in no event less advantageous to Holder. Substitute Option
Issuer shall also enter into an agreement with Holder in substantially the
same form as this Agreement, which shall be applicable to the Substitute
Option.
(d) The Substitute Option shall be exercisable for such
number of shares of Substitute Common (as hereinafter defined) as is equal
to the Assigned Value (as hereinafter defined) multiplied by the number of
shares of Issuer Common for which the Option was theretofore exercisable,
divided by
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the Average Price (as hereinafter defined). The exercise price of
Substitute Option per share of Substitute Common (the "Substitute Option
Price") shall then be equal to the Purchase Price multiplied by a fraction
in which the numerator is the number of shares of Issuer Common for which
the Option was theretofore exercisable and the denominator is the number of
shares of the Substitute Common for which the Substitute Option is
exercisable.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the
continuing or surviving corporation of a consolidation or merger with
Issuer (if other than Issuer), (ii) Issuer in a merger in which
Issuer is the continuing or surviving person, or (iii) the transferee
of all or substantially all of Issuer's assets (or a substantial part
of the assets of its subsidiaries taken as a whole).
(2) "Substitute Common" shall mean the shares of
capital stock (or similar equity interest) with the greatest voting
power in respect of the election of directors (or persons similarly
responsible for the direction of the business and affairs) of the
Substitute Option Issuer.
(3) "Assigned Value" shall mean the highest of (w) the
price per share of Issuer Common at which a Tender Offer or an
Exchange Offer therefor has been made, (x) the price per share of
Issuer Common to be paid by any third party pursuant to an agreement
with Issuer, (y) the highest closing price for shares of Issuer
Common within the six (6) month period immediately preceding the
consolidation, merger, or sale in question and (z) in the event of a
sale of all or substantially all of Issuer's assets or deposits an
amount equal to (i) the sum of the price paid in such sale for such
assets (and/or deposits) and the current market value of the
remaining assets of Issuer, as determined by a nationally recognized
investment banking firm selected by Holder divided by (ii) the number
of shares of Issuer Common outstanding at such time. In the event
that a Tender Offer or an Exchange Offer is made for Issuer Common or
an agreement is entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or other
property issuable or deliverable in exchange for Issuer Common shall
be determined by a nationally recognized investment banking firm
selected by Holder.
(4) "Average Price" shall mean the average closing
price of a share of Substitute Common for the one year immediately
preceding the consolidation, merger, or sale in question, but in no
event higher than the closing price of the shares of Substitute
Common on the day preceding such consolidation, merger or sale;
provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common
stock issued by Issuer, the person merging into Issuer or by any
company which controls such person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the
aggregate of the shares of Substitute Common outstanding prior to exercise
of the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of
Substitute Common but for the limitation in the first sentence of this
Section 7(f), Substitute Option Issuer shall make a cash payment to Holder
equal to the excess of (i) the value of the Substitute Option without
giving effect to the limitation in the first sentence of this Section 7(f)
over (ii) the value of the Substitute Option after giving effect to the
limitation in the first sentence of this Section 7(f). This difference in
value shall be determined by a nationally-recognized investment banking
firm selected by Holder.
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(g) Issuer shall not enter into any transaction described in
Section 7(b) unless the Acquiring Corporation and any person that controls
the Acquiring Corporation assume in writing all the obligations of Issuer
hereunder and take all other actions that may be necessary so that the
provisions of this Section 7 are given full force and effect (including,
without limitation, any action that may be necessary so that the holders of
the other shares of common stock issued by Substitute Option Issuer are not
entitled to exercise any rights by reason of the issuance or exercise of
the Substitute Option and the shares of Substitute Common are otherwise in
no way distinguishable from or have lesser economic value (other than any
diminution in value resulting from the fact that the Substitute Common are
restricted securities, as defined in Rule 144 under the Securities Act or
any successor provision) than other shares of common stock issued by
Substitute Option Issuer).
8. Repurchase at the Option of Holder.
(a) Subject to the last sentence of Section 3(a), at the
request of Holder at any time commencing upon the first occurrence of a
Repurchase Event (as defined in Section 8(d)) and ending twelve (12) months
immediately thereafter, Issuer shall repurchase from Holder (i) the Option,
and (ii) all shares of Issuer Common purchased by Holder pursuant hereto
with respect to which Holder then has beneficial ownership. The date on
which Holder exercises its rights under this Section 8 is referred to as
the "Request Date". Such repurchase shall be at an aggregate price (the
"Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any
shares of Issuer Common acquired pursuant to the Option with respect
to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common over (y) the Purchase
Price (subject to adjustment pursuant to Section 7), multiplied by
the number of shares of Issuer Common with respect to which the
Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over
the Purchase Price (subject to adjustment pursuant to Section 7) paid
(or, in the case of Option Shares with respect to which the Option
has been exercised but the Closing Date has not occurred, payable) by
Holder for each share of Issuer Common with respect to which the
Option has been exercised and with respect to which Holder then has
beneficial ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8,
Issuer shall, within ten (10) business days after the Request Date, pay the
Section 8 Repurchase Consideration to Holder in immediately available
funds, and contemporaneously with such payment, Holder shall surrender to
Issuer the Option and the certificates evidencing the shares of Issuer
Common purchased thereunder with respect to which Holder then has
beneficial ownership, and Holder shall warrant that it has sole record and
beneficial ownership of such shares and that the same are then free and
clear of all liens. Notwithstanding the foregoing, to the extent that
prior notification to or approval of any Regulatory Agency is required in
connection with the payment of all or any portion of the Section 8
Repurchase Consideration, Holder shall have the ongoing option to revoke
its request for repurchase pursuant to Section 8, in whole or in part, or
to require that Issuer deliver from time to time that portion of the
Section 8 Repurchase Consideration that it is not then so prohibited from
paying and promptly file the
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required notice or application for approval and expeditiously process the
same (and each party shall cooperate with the other in the filing of any
such notice or application and the obtaining of any such approval). If any
Regulatory Agency disapproves of any part of Issuer's proposed repurchase
pursuant to this Section 8, Issuer shall promptly give notice of such fact
to Holder. If any Regulatory Agency prohibits the repurchase in part but
not in whole, then Holder shall have the right (i) to revoke the repurchase
request, or (ii) to the extent permitted by such Regulatory Agency,
determine whether the repurchase should apply to the Option and/or Option
Shares and to what extent to each, and Holder shall thereupon have the
right to exercise the Option as to the number of Option Shares for which
the Option was exercisable at the Request Date less the sum of the number
of shares covered by the Option in respect of which payment has been made
pursuant to Section 8(a)(ii) and the number of shares covered by the
portion of the Option (if any) that has been repurchased. Holder shall
notify Issuer of its determination under the preceding sentence within five
(5) business days of receipt of notice of disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of
Holder's rights under this Section 8 shall terminate on the date of
termination of this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price"
means the highest of (i) the highest price per share of Issuer Common paid
for any such share by the person or groups described in Section 8(d)(i),
(ii) the price per share of Issuer Common received by holders of Issuer
Common in connection with any merger or other business combination
transaction described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or
(iii) the highest closing sales price per share of Issuer Common on Nasdaq
(or if Issuer Common is not traded on Nasdaq, the highest bid price per
share as quoted on the principal trading market or securities exchange on
which such shares are traded as reported by a recognized source chosen by
Holder) during the forty (40) business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of Issuer's
assets, the Applicable Price shall be the sum of the price paid in such
sale for such assets and the current market value of the remaining assets
of Issuer as determined by a nationally recognized investment banking firm
selected by Holder, divided by the number of shares of the Issuer Common
outstanding at the time of such sale. If the consideration to be offered,
paid or received pursuant to either of the foregoing clauses (i) or (ii)
shall be other than in cash, the value of such consideration shall be
determined in good faith by an independent nationally recognized investment
banking firm selected by Holder and reasonably acceptable to Issuer, which
determination shall be conclusive for all purposes of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any
person (other than Grantee or any subsidiary of Grantee) shall have
acquired beneficial ownership of (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), or the right to acquire beneficial
ownership of, or any "group" (as such term is defined under the Exchange
Act) shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 50% or more of the then outstanding shares
of Issuer Common, or (ii) any of the transactions described in Section
7(b)(i), 7(b)(ii) or 7(b)(iii) shall be consummated.
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9. Registration Rights.
(a) Demand Registration Rights. Issuer shall, subject to the
conditions of Section 9(c) below, if requested by any Holder, including
Grantee and any permitted transferee ("Selling Shareholder"), as
expeditiously as possible prepare and file a registration statement under
the Securities Act if such registration is necessary in order to permit the
sale or other disposition of any or all shares of Issuer Common or other
securities that have been acquired by or are issuable to the Selling
Shareholder upon exercise of the Option in accordance with the intended
method of sale or other disposition stated by the Selling Shareholder in
such request, including without limitation a "shelf" registration statement
under Rule 415 under the Securities Act or any successor provision, and
Issuer shall use its best efforts to qualify such shares or other
securities for sale under any applicable state securities laws.
(b) Additional Registration Rights. If Issuer at any time
after the exercise of the Option proposes to register any shares of Issuer
Common under the Securities Act in connection with an underwritten public
offering of such Issuer Common, Issuer will promptly give written notice to
the Selling Shareholders of its intention to do so and, upon the written
request of any Selling Shareholder given within thirty (30) days after
receipt of any such notice (which request shall specify the number of
shares of Issuer Common intended to be included in such underwritten public
offering by the Selling Shareholder), Issuer will cause all such shares for
which a Selling Shareholder requests participation in such registration, to
be so registered and included in such underwritten public offering;
provided, however, that Issuer may elect to not cause any such shares to be
so registered (i) if the underwriters in good faith object for valid
business reasons, or (ii) in the case of a registration solely to implement
an employee benefit plan or a registration filed on Form S-4 of the
Securities Act or any successor Form; provided, further, however, that such
election pursuant to (i) may only be made two times. If some but not all
the shares of Issuer Common, with respect to which Issuer shall have
received requests for registration pursuant to this Section 9(b), shall be
excluded from such registration, Issuer shall make appropriate allocation
of shares to be registered among the Selling Shareholders desiring to
register their shares pro rata in the proportion that the number of shares
requested to be registered by each such Selling Shareholder bears to the
total number of shares requested to be registered by all such Selling
Shareholders then desiring to have Issuer Common registered for sale.
(c) Conditions to Required Registration. Issuer shall use
all reasonable efforts to cause each registration statement referred to in
Section 9(a) above to become effective and to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective; provided, however, that Issuer may delay
any registration of Option Shares required pursuant to Section 9(a) above
for a period not exceeding ninety (90) days provided Issuer shall in good
faith determine that any such registration would adversely affect an
offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Act
pursuant to Section 9(a) above:
(i) prior to the earliest of (a) termination of the
Merger Agreement pursuant to Article Seven thereof, (b) failure to
obtain the requisite shareholder approval pursuant to Sections
6.01(d) and 6.02(d) of the Merger Agreement, and (c) a Purchase Event
or a Preliminary Purchase Event;
(ii) on more than one occasion during any calendar year;
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(iii) within ninety (90) days after the effective date of
a registration referred to in Section 9(b) above pursuant to which
the Selling Shareholder or Selling Shareholders concerned were
afforded the opportunity to register such shares under the Securities
Act and such shares were registered as requested; and
(iv) unless a request therefor is made to Issuer by
Selling Shareholders that hold at least 25% or more of the aggregate
number of Option Shares (including shares of Issuer Common issuable
upon exercise of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to
maintain the effectiveness of any registration statement after the
expiration of nine (9) months from the effective date of such registration
statement. Issuer shall use all reasonable efforts to make any filings,
and take all steps, under all applicable state securities laws to the
extent necessary to permit the sale or other disposition of the Option
Shares so registered in accordance with the intended method of distribution
for such shares; provided, however, that Issuer shall not be required to
consent to general jurisdiction or qualify to do business in any state
where it is not otherwise required to so consent to such jurisdiction or to
so qualify to do business.
(d) Expenses. Except where applicable state law prohibits
such payments, Issuer will pay all expenses (including without limitation
registration fees, qualification fees, blue sky fees and expenses
(including the fees and expenses of counsel), legal expenses, including the
reasonable fees and expenses of one counsel to the holders whose Option
Shares are being registered, printing expenses and the costs of special
audits or "cold comfort" letters, expenses of underwriters, excluding
discounts and commissions but including liability insurance if Issuer so
desires or the underwriters so require, and the reasonable fees and
expenses of any necessary special experts) in connection with each
registration pursuant to Section 9(a) or 9(b) above (including the related
offerings and sales by holders of Option Shares) and all other
qualifications, notifications or exemptions pursuant to Section 9(a) or
9(b) above.
(e) Indemnification. In connection with any registration
under Section 9(a) or 9(b) above, Issuer hereby indemnifies the Selling
Shareholders, and each underwriter thereof, including each person, if any,
who controls such holder or underwriter within the meaning of Section 15 of
the Securities Act, against all expenses, losses, claims, damages and
liabilities caused by any untrue, or alleged untrue, statement of a
material fact contained in any registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission, or
alleged omission, to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue
statement that was included by Issuer in any such registration statement or
prospectus or notification or offering circular (including any amendments
or supplements thereto) in reliance upon and in conformity with,
information furnished in writing to issuer by such indemnified party
expressly for use therein, and Issuer and each officer, director and
controlling person of Issuer shall be indemnified by such Selling
Shareholders, or by such underwriter, as the case may be, for all such
expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement, that was included by issuer in any such
registration statement or prospectus or notification or offering circular
(including any amendments or supplements thereto) in reliance upon, and in
conformity with, information furnished in writing to issuer by such holder
or such underwriter, as the case may be, expressly for such use.
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Promptly upon receipt by a party indemnified under this Section
9(e) of notice of the commencement of any action against such indemnified
party in respect of which indemnity or reimbursement may be sought against
any indemnifying party under this Section 9(e), such indemnified party
shall notify the indemnifying party in writing of the commencement of such
action, but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any indemnified
party under this Section 9(e). In case notice of commencement of any such
action shall be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to the extent
it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense of such action at its own expense, with counsel
chosen by it and satisfactory to such indemnified party. The indemnified
party shall have the right to employ separate counsel in any such action
and participate in the defense thereof, but the fees and expenses of such
counsel (other than reasonable costs of investigation) shall be paid by the
indemnified party unless (i) the indemnifying party either agrees to pay
the same, (ii) the indemnifying party fails to assume the defense of such
action with counsel satisfactory to the indemnified party, or (iii) the
indemnified party has been advised by counsel that one or more legal
defenses may be available to the indemnifying party that may be contrary to
the interest of the indemnified party, in which case the indemnifying party
shall be entitled to assume the defense of such action notwithstanding its
obligation to bear fees and expenses of such counsel. No indemnifying
party shall be liable for any settlement entered into without its consent,
which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 9(e) is
unavailable to a party otherwise entitled to be indemnified in respect of
any expenses, losses, claims, damages or liabilities referred to herein,
then the indemnifying party, in lieu of indemnifying such party otherwise
entitled to be indemnified, shall contribute to the amount paid or payable
by such party to be indemnified as a result of such expenses, losses,
claims, damages or liabilities in such proportion as is appropriate to
reflect the relative benefits received by issuer, the Selling Shareholders
and the underwriters from the offering of the securities and also the
relative fault of Issuer, the Selling Shareholders and the underwriters in
connection with the statements or omissions which resulted in such
expenses, losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The amount paid or payable by a party
as a result of the expenses, losses, claims, damages and liabilities
referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with investigating
or defending any action or claim, provided, however, that in no case shall
any Selling Shareholder be responsible, in the aggregate, for any amount in
excess of the net offering proceeds attributable to its Option Shares
included in the offering. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. Any obligation by any holder to indemnify
shall be several and not joint with other holders.
In connection with any registration pursuant to Section 9(a) or
9(b) above, Issuer and each Selling Shareholder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply with all
reporting requirements and will do all such other things as may be
necessary to permit the expeditious sale at any time of any Option Shares
by the Selling Shareholders thereof in accordance with and to the extent
permitted by any rule or regulation promulgated by the S.E.C. from time to
time, including, without limitation, Rule 144A. Issuer shall at its
expense provide the Selling Shareholders with any information necessary in
connection with
13
the completion and filing of any reports or forms required to be filed by
them under the Securities Act or the Exchange Act, or required pursuant to
any state securities laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in
connection with the issuance and the sale of the Option Shares and in
connection with the exercise of the Option, and will save the Selling
Shareholders harmless, without limitation as to time, against any and all
liabilities, with respect to all such taxes.
10. Quotation; Listing. If Issuer Common or any other securities
to be acquired in connection with the exercise of the Option are then
authorized for quotation or trading or listing on any securities exchange,
Issuer, upon the request of Holder, will promptly file an application, if
required, to authorize for quotation or trading or listing the shares of
Issuer Common or other securities to be acquired upon exercise of the
Option on such securities exchange and will use its best efforts to obtain
approval, if required, of such quotation or listing as soon as practicable.
11. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Holder, upon
presentation and surrender of this Agreement at the principal office of
Issuer for other Agreements providing for Options of different
denominations entitling the holder thereof to purchase in the aggregate the
same number of shares of Issuer Common purchasable hereunder. The terms
"Agreement" and "Option" as used herein include any other Agreements and
related Options for which this Agreement (and the Option granted hereby)
may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer,
whether or not the Agreement so lost, stolen, destroyed or mutilated shall
at any time be enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Each of the parties hereto shall bear and pay
all costs and expenses incurred by it or on its behalf in connection with
the transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement
may be waived at any time by the party that is entitled to the benefits of
such provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement: No Third-Party Beneficiaries;
Severability. This Agreement, together with the Merger Agreement and the
other documents and instruments referred to herein and therein, between
Grantee and Issuer (i) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof, and (ii) is not intended
to confer upon any person other than the parties hereto (other than the
indemnified parties under Section 9(e) and any transferees of the Option
Shares or any permitted transferee of this Agreement pursuant to Section
12(h)) any rights or remedies hereunder. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction or Regulatory Agency to be invalid, void or unenforceable, the
remainder of the terms, provisions,
14
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated. If for
any reason such court or Regulatory Agency determines that the Option does
not permit Holder to acquire, or does not require Issuer to repurchase, the
full number of shares of Issuer Common as provided in Section 3 (as may be
adjusted herein), it is the express intention of Issuer to allow Holder to
acquire or to require Issuer to repurchase such lesser number of shares as
may be permissible without any amendment or modification hereof.
(d) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Missouri without
regard to any applicable conflicts of law rules.
(e) Descriptive Headings. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) to the parties at the addresses set forth in the
Merger Agreement (or at such other address for a party as shall be
specified by like notice).
(g) Counterparts. This Agreement and any amendments hereto
may be executed in two counterparts, each of which shall be considered one
and the same agreement and shall become effective when both counterparts
have been signed and delivered, it being understood that both parties need
not sign the same counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by
any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party, except that Holder
may assign this Agreement to a wholly-owned subsidiary of Holder and Holder
may assign its rights hereunder in whole or in part after the occurrence of
a Purchase Event. Subject to the preceding sentence, this Agreement shall
be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the
Option by the Holder, Issuer and the Holder shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for
by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree
to waive any requirement for the securing or posting of any bond in
connection with the obtaining of any such equitable relief and that this
provision is without prejudice to any other rights that the parties hereto
may have for any failure to perform this Agreement.
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IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
FOURTH FINANCIAL CORPORATION
By /s/ Darrell G. Knudson
Darrell G. Knudson
Chairman and Chief Executive Officer
BOATMEN'S BANCSHARES, INC.
By /s/ Gregory L. Curl
Gregory L. Curl
Vice Chairman